Between 94% and 75% of us (depending on which official estimate you follow), are not paying for advice. Unadvised drawdown is likely to become more common – unless the mass market advice market revives. Although the banks and insurers are investing again in direct advisers, most people in their fifties and sixties are staring at important retirement choices with little or no help on what to do.
What is needed is a straightforward way of choosing someone to help you spend your savings. The simplest choice is to go to an annuity provider and give it all your money – you have your income for life and a degree of customisation so that the income doesn’t die with you and some options around inflation. But not many of us are buying annuities, fact rather than advice – more should!
If you’re not buying an annuity and you want your money back, you can of course cash in your pension if you’re over 55 – it’s a bloody stupid thing to do 99% of the time – at First Actuarial you’d hit 100% on the muppotometre scale if you triggered a shed load of tax by taking all your money at once.
Which leaves us with the opportunity to draw down our savings over time using a drawdown provider.
This brings us back to the start of this article. It is assumed by just about everyone that unadvised drawdown is a bad thing as people cannot be trusted not to screw things up. There’s an interesting article from Plat-forum in Money Marketing suggesting that advisers should be very careful about advising on drawdown in case they screw things up (and their businesses at risk). Frankly, drawdown is a hazardous business and I’m about to show you why!
Well I won’t , the admirable Lang Cat will. Follow this link and you’ll get to the summary of the Lang Cat’s February 2019 White Paper Retirement Income: The Direct Platform Market, which was commissioned by tech provider GBST. You can download the report here, This direct to consumer market is referred to going forward as “D2C”
What the Lang Cat is telling us ordinary consumers
This is the first buyers guide to drawdown I have ever seen. What it does is analyse the decisions that consumers need to take when buying a drawdown product and then test those decisions on various providers who offer products directly to consumers such as you and I.
I won’t spoil the fun by re-publishing all the pages , but here are a couple from the simplified version on Citywire sumary